22 April 2014

Tanzania: Sovereign Wealth Fund a Well Thought Idea

TANZANIA will soon establish a sovereign wealth fund (SWF) to safeguard, monitor and safeguard proceeds from the country's natural resources, especially natural gas.

President Jakaya Kikwete revealed the government plans on the proposed fund during talks with editors of various media houses in Dar es Salaam recently.

He rightly underscored the importance of the proposed fund in managing proceeds from the country's vital resources for the benefit of the current and future generations.

Tanzania is today having an important place in the global energy map, after striking vast onshore and off-shore natural gas fields.

Official sources put the country's natural gas reserves at around 46 trillion cubic feet (tcf), but it is estimated that reserves might soon jump to 200 tcf within the next two years.

It should, however, be stressed that these resources are finite and soon or later all the wells that the country is now proud of would be exhausted.

It is, therefore, important to start planning for sustainable management and harvesting of such resources to prevent the country from falling into resource curse.

Tanzania should learn from other countries including Qatar and the United Arab Emirates (UAE) or Dubai, which after a few decades managed to transform their economies tremendously from over dependence of oil and gas. Dubai is now an international hub for provision of trade and financial services.

It is a place where millions of tourists visit annually to admire several man-made wonders including tallest buildings on earth.

Doha is also no longer a hopeless city in the desert, but a shining place accommodating several high rise buildings and vast floral gardens developed through drip irrigation technology.

It is the city of rising global prominence which is scheduled to host the FIFA World Cup in 2020. With the establishment of the sovereignty wealth fund, Tanzanians will be able to set aside some of the proceeds from natural gas and other resources for the country's future generations.

After exhaustion of natural gas reserves the grand children of today's citizens must inherit a prosperous nation, as opposed to poverty and misery.

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